With the current predictions about rainfall distribution and the monsoon’s advance, soybean prices are due for yet another rally in the short term.

On the completion of the rabi 2018-19 harvesting, farmers are now geared up for the new season 2019-20, hoping for the rain gods to shower them with blessings. The weather agency, Skymet, however, is pessimistic about the 2019 southwest monsoon and expects it to be weak and under the shadow of El Nino.

The present weather signals a delay in the onset and sluggish progress of the southwest monsoon. As far as the quantitative region-wise distribution of rainfall is concerned, the agency foresees below-normal rains for all the four regions, though rains in central India, the east and north-eastern states are likely to be poorer than those in the southern peninsula and north-west India.

Going by the weather agency's forecast, the late onset and slow progress of the monsoon might, to some extent, delay the sowing of Kharif crops in non-irrigated belts. However, as the monsoon picks up momentum, sowing may commence and the impact could be contained.

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With 9 percent deficit over central India, particularly in MP, soybean sowing could be affected. Last year, poor distribution of rainfall resulted in crop losses for many agro commodities. However, soybean acreage, as well as production, rose substantially as the soybean-growing belts of MP received sufficient rains.

Yet, despite higher output, prices tested the 2018 peak of 3,850 as meal exports to a new destination, Iran, surged. During the first seven months of the 2018-19 (Oct-Sep) marketing year, soymeal exports rose to 16.9 lakh tonnes, from 11.8 lakh tonnes in the corresponding period last year.

However, prices didn't hold beyond the previous year's high as global soybean markets were under pressure due to ongoing trade tensions between the US and China. In fact, CBOT soybean futures hit a decade low this week on concerns demand that the largest importer, China, may be hit.

Global markets are now shifting focus from trade tensions to wet weather in the US, which is threatening spring plantings. The soybean crop was 9 percent planted, behind the five-year 29 percent average and the average 15 percent trade estimate. Soybean futures rebounded from a decade low amid slow planting progress.

With the current predictions about rainfall distribution and the monsoon's advance, soybean prices are due for yet another rally in the short term. Unfavourable planting conditions in the US would further support the rally in domestic markets.

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